Canada’s equities regulator has excluded crypto funds from reduced margin eligibility, citing volatility, liquidity risks and regulatory concerns, making leveraged trading more expensive.
The Canadian Investment Regulatory Organization (CIRO) ruled that cryptocurrency funds will not be eligible for reduced margin rates, citing concerns over volatility, liquidity risks and regulatory uncertainty.
On Feb. 5, CIRO released a new List of Securities Eligible for Reduced Margin (LSERM). This quarterly list identifies which securities are eligible for reduced margin rates. Financial institutions eligible for reduced margin rates benefit from improved capital efficiency and lower trading costs.
In the announcement, CIRO said that cryptocurrency funds are not eligible for reduced margins “until further notice.” As a result, investors trading cryptocurrency funds will need to maintain higher collateral, making it more expensive to leverage crypto positions compared with stocks or exchange-traded funds (ETFs).
Read more,### Key Points from the Article
– **Regulator Decision:** The Canadian Investment Regulatory Organization (CIRO) has decided that cryptocurrency funds are not eligible for reduced margin rates.
– **Reasons for the Decision:**
– High volatility of cryptocurrencies.
– Liquidity risks associated with crypto markets.
– Ongoing regulatory uncertainty surrounding cryptocurrencies.
– **Impact on Investors:** Investors in cryptocurrency funds must maintain higher collateral, resulting in more expensive leveraged trading compared to other securities like stocks or ETFs.
– **LSERM List:** The List of Securities Eligible for Reduced Margin, updated quarterly by CIRO, outlines which securities can enjoy lower trading costs and improved capital efficiency.
### Hot Take on the Situation
Well, it looks like CIRO is not ready to swipe right on crypto’s profile just yet! In the ever-tumultuous dating world of finance, cryptocurrencies are still seen as the wild, unpredictable ones that might just drink all your expensive champagne and then disappear. By excluding crypto funds from the reduced margin benefits, CIRO is essentially telling investors to tread carefully, like a financial dad laying down the law at prom night. Investors hoping for a cheaper way to woo the volatile beauty of cryptos will just have to pay the full dowry for now. #Canada #CryptoRegulation #CIRO #InvestorWoes
